DOW JONES NEWSWIRES
Borders Group Inc.'s (BGP) fiscal fourth-quarter net income
dropped 54% amid non-cash charges as the company reported a drop in
same-store sales and margins.
Chief Executive Ron Marshall said the company expects sales to
trend negative throughout the year, as it plans for "only minimal
capital expenditures." Marshall replaced former Chief Executive
George Jones in January, as part of a management reshuffle.
Booksellers have been caught in one of the worst consumer
spending environments in recent years. Borders has trimmed its work
force recently, as the struggling books and music retailer looks to
cut costs amid its turnaround.
For the quarter ended Jan. 31, the second-largest U.S. book
seller reported net income of $29.6 million, or 49 cents a share,
down from $64.7 million, or $1.10 a share, a year earlier. The
latest quarter included charges of $34.9 million. Excluding items,
Borders' net income from continuing operations fell to $1.05 a
share from $1.26.
Revenue, meanwhile, dropped 14% to $1.09 billion.
Analysts polled by Thomson Reuters expected per-share earnings
of 95 cents on revenue of $1.15 billion. Consolidated gross margin
on an operating basis fell to 28.7% from 31%.
Same-store sales at U.S. Borders superstores fell 15%, while the
figure dropped 4.7% at the mall-based Waldenbooks segment, which
the company has been shrinking.
Sales in the international segment decreased 22%.
Earlier this month, larger rival Barnes & Noble Inc. (BKS)
reported its fiscal fourth-quarter net income dropped 30% amid weak
store traffic and a drop in holiday spending.
On Monday, Borders won a year extension to April 2010 of a $42.5
million loan from its largest shareholder, Pershing Square Capital
Management LP, and said it would allow its right to compel a sale
of its U.K.-based Paperchase gifts and stationery business to
Pershing Square to expire.
The company considered selling itself last year after disclosing
liquidity problems, but later pulled itself off the market. Borders
has since sold off most of its foreign assets and reduced its
debt.
Shares were up 3.2%, or 2 cents, to 65 cents in after-hours
trading. Borders' stock has slumped 92% from its 52-week high in
September.
-By John Kell, Dow Jones Newswires; 201-938-5285;
john.kell@dowjones.com